Has Dacre lost his Midas touch in Ireland?

If News International is worrying about London's escalating newspaper war - Associated Newspapers is launching London Lite this week in direct competition to NI's the London Paper - it should draw comfort from goings-on across the Irish Sea. Even the legendary Paul Dacre, it seems, can flop.

Dacre, editor of the Daily Mail and editor in chief of Associated, runs one of Britain's most successful newspaper empires, has his finger on the pulse of middle England, and is ahead of the game in innovations - such as the 1999 launch of the free newspaper Metro.

Yet in Ireland, Dacre has a reputation as a spendthrift fumbling blindly in a landscape he does not understand. The three Associated papers there, Ireland on Sunday, Metro and the Irish Daily Mail, are experiencing a decidedly rocky time; Associated is losing an estimated €33m a year on its Irish venture.

Dacre, according to Derry Street insiders, is rattled. He sent some of London's big guns, including Martin Clarke, associate editor of the Daily Mail, to Dublin to sort things out. Clarke - who had already been editor in chief of Ireland on Sunday and overseen the launch of the Irish Daily Mail last February - must have seen his latest Irish assignment as recognition that his star was in the ascendancy: he has long regarded Ted Verity, the former deputy at the Mail on Sunday and now editor in chief of the Irish titles, as a competitor for the editorship of the Daily Mail. "Clarke hasn't yet won the beauty contest, but being parachuted into Dublin to help Ted sends a clear message," claims a colleague of Clarke's. "Clarke's the one Dacre can rely on to get things done."

One legacy of Clarke's intervention is the rebranding of Ireland on Sunday next month. A new supplement and an expanded TV magazine have been flagged, but the most significant change is renaming the paper as the Irish Mail on Sunday. Whether these measures will stop the paper's circulation slide (from 170,000 four years ago to 127,000) remains to be seen.

When Associated Newspapers decided to buy Ireland on Sunday for €9.4m in 2001, the news sent shockwaves through the Irish press. Associated had a reputation as a ruthless competitor ready to wage price wars and play the long game - back in London, it had stuck with the Mail on Sunday for almost 10 years and spent close to £200m before the paper made any money.

Most wary were the executives at Tony O'Reilly's Independent News & Media: Associated was gunning for the middle-class market from which the Irish Independent drew its readers. As editor in chief of its Irish operation, Associated appointed Clarke, who had just proved himself as editor in chief of the Scottish Daily Mail, where he increased circulation from 30,000 to 120,000 in a couple of years.

But in Ireland Clarke's management style (his nickname is Jurassic Clarke) earned his company a reputation as a harsh employer. Journalists are more likely to have jobs for life and journalism tends to be seen as a vocation that attracts gifted individualists rather than an industry that makes a profit. Clarke's abrasive manner turned off some talented new blood who might otherwise have joined the ambitious new player.

Verity succeeded Clarke at Ireland on Sunday two years ago. A graduate of the Femail section of the Daily Mail, his female-friendly antennae were seen as invaluable: Irish women, who traditionally turned to the red tops, were the great untapped potential for Ireland on Sunday, according to Dacre.

Banking on women may ultimately pay off, but Dacre's penchant for centralisation means that he will not allow the Irish satellites to forge and develop a distinct identity: the papers share the look and feel of the Mail, without enough local colouring (or even local adverts) to persuade Irish readers that this is a homegrown enterprise, not a colonial one. Equally, the campaigning themes that have served the Daily Mail so well in Britain - immigration, Europe, Blair - do not work in an Ireland that attributes its prosperity to EU membership and the resultant influx of outside labour.

Ireland on Sunday losses are reputed to be €8m a year. Yet despite these gloomy figures, Associated continued to stretch its empire across the Irish Sea, launching a Metro freesheet in Dublin last October and the Irish Daily Mail last February. Metro has had to contend with a spoiler, Herald AM, launched by Independent News & Media on the same day. About 5,000 copies of Metro are picked up per day; Herald AM's circulation is 12 times that.

To launch the Irish Daily Mail, Associated reduced the cover price to 30 cents for three months, 50 cents after that. This is a fraction of the competition (the Irish Independent and the Irish Times sell at €1.60). Despite the low price and the accompanying TV advertising and DVD campaign, circulation slipped from an original 82,000 to 55,000 in July. (The Irish Independent sells 170,000 copies a day.) Associated remains stubbornly optimistic about this - "55,000 copies far exceeds anybody's expectations," claims a senior executive in Dublin.

Media analyst Gavin Kelleher of Goodbody puts Associated Newspapers' Metro losses at about €5m a year; he reckons that for the Irish Daily Mail, the loss is €20m. It is a strategy that leaves Vincent Crowley, chief executive of Independent News & Media, baffled: "I can only say I am very surprised: commercially, it doesn't make sense, and even editorially it doesn't add up."

Observers in Ireland say that Dacre's problem may stem from his failure to recognise that Ireland is not like Scotland, where the Mail has been successfully cloned. "It's a separate country, with a separate government, separate agenda, different sensibilities."

No one can say how great a loss Dacre is prepared to suffer to hold on to the Irish titles. But his persistence is more than a face-saving exercise: the Irish market is very attractive. Independent News & Media rakes in profits of about €80m from its Irish operations. Ireland remains a booming economy, with a growing population and lots of immigrants (many of them Brits). Kelleher points out, too, that structural changes affecting British media do not yet apply to Ireland: "A shift to online media may be taking place, but it is much slower than in the UK. Traditional media is still growing over here," he says, "and advertising continues to go up. The long view that Associated has adopted may well pay off."

Meanwhile, though, the competition in Ireland can sleep at night. And in London, it can glean some satisfaction from knowing that not all Dacre touches turns to gold.

Where there's a Will there's a widget

News that Will Lewis has been anointed managing director (editorial) has sparked much speculation at the Daily Telegraph. Could the Barclays' blue-eyed boy be destined for an exclusively managerial role? Lewis, a Sunday Times business journalist whom the Barclays brought in when they bought the Telegraph in 2004, has long been rumoured to be a shoo-in as next editor, succeeding acting editor John Bryant.

While biding his time, Lewis was charged with changing the paper's production system and its move to new headquarters in Victoria. This management challenge (or "widget counting and chair stacking" as Lewis himself termed it) has kept him out of circulation, and allowed Bryant to strut his stuff back at HQ.

The Bryant Daily Telegraph has increased its news coverage and improved its features pages; it now seeks a new comment editor to sharpen a page where stars such as Boris Johnson and Simon Heffer still risk being overshadowed by second-rate columnists.

Telegraph staff initially resented Bryant for replacing editor Martin Newland, who resigned over Bryant's appointment as editor in chief. Now, they have come round to what one journalist calls "the firm hand on the tiller. He's made some good editorial calls, and morale is up. With every day that passes, Bryant is securing his hold on the paper - you have to ask if the Barclays and Murdoch MacLennan [chief executive of the Telegraph Group] will dare upset the status quo by getting Will Lewis in."

The launch of Lewis's new integrated approach - the Telegraph as paper, video and digital product - is scheduled for Christmas Day. Its success will decide whether 2007 will find him in the editor's chair or counting widgets.